Financial Action Task Force (FATF)

Overview

The Financial Action Task Force (FATF) is an intergovernmental body that sets global standards for combating money laundering, terrorist financing, and proliferation financing. Its 40 Recommendations guide national laws on KYC, beneficial ownership, sanctions, supervision, and enforcement.

FATF conducts mutual evaluations, issues grey/black lists, and publishes typology reports that shape compliance programs worldwide. Banks, fintechs, and VASPs align policies to FATF guidance via local regulators, influencing CDD, EDD, transaction monitoring, and reporting. Being connected to high-risk jurisdictions can raise exposure and trigger enhanced measures. Institutions track FATF updates to adjust controls, document risk-based approaches, and demonstrate effectiveness. Non-alignment can lead to de-risking by counterparties, higher correspondent banking friction, and regulatory penalties.

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Related Terms

Risk Based Approach (RBA)

Sanctions Screening

FAQ

Why does FATF matter to me?

Its standards cascade into local rules. Aligning with FATF helps satisfy regulators, maintain correspondent relationships, and calibrate AML controls across products and geographies.

What are grey/black lists?

FATF identifies jurisdictions with strategic AML/CFT deficiencies. Grey-listed countries face increased monitoring; black-listed face countermeasures both affect risk scoring and compliance obligations.

How do typologies help?

They describe emerging laundering methods (e.g., TBML, crypto misuse), informing red flags, scenario tuning, and training so monitoring remains effective against real-world threats.

How often do standards change?

FATF periodically revises guidance and updates lists. Effective programs bake in governance to review changes, refresh risk assessments, and update policies promptly.